FORECAST 2023: Retirement Matters
The rising costs of health care, increased longevity, and financial pressures are among the headwinds consumers face when it comes to achieving financial wellness and retirement security. The insurance executives who participated in this year’s MarketFacts forecast survey are determined to help people meet these and any other challenges that stand in the way of a secure retirement.
Financial literacy and inclusion are vital to this endeavor. According to Amy Friedrich, President, US Insurance Solutions, Principal Financial Group, there are gaps related to financial inclusion in the United States For example, “There is a clear association between business size and what employers provide to promote financial inclusivity. Larger businesses score considerably higher than small businesses for the level of support they offer to the workforce via financial guidance, insurance, pension contributions, and pay initiatives. There is opportunity for businesses, especially smaller businesses, to increase access to income protection solutions and retirement benefits for their employees. That means there’s opportunity for [our] industry to better equip small businesses with the right information and tools to support financial security for employees.”
Our industry also can help by “assisting previously underrepresented populations in obtaining the products that will help them reach financial security,” says Michael Simonds, Chief Operating Officer, Unum Group. [We also must] look through a lens of equality in all areas of insurance — marketing, distribution, product development, and so on.”
Our industry must “continue educating consumers on [our products], how we can help [them] meet their goals for retirement, and how we may deliver on a guaranteed basis and alleviate some risk,” says Joe Monk, SVP, Financial Services, State Farm.
To that end, “We should pull together through the various industry bodies and associations to share the role that we play in helping consumers protect their financial futures, now and in retirement,” says Neil Sprackling, President, US Life & Health, SwissRe America Holding. “This should be through all forms of media possible — social, press, TV, and so on — sharing stories where our products and services have made a clear difference to peoples’ lives.”
“As an industry, we need to continue to work with and educate regulators and legislators to show the value our products and processes provide to consumers,” says Mark Holweger, President & CEO, Legal & General America. “We as an industry need to be open to new ways of collaborating across companies to leverage individual strengths in support of serving client needs,” he adds. “The digitization of the industry will open up new opportunities in this space.”
Mike James, EVP, Head of Life & Wealth, NFP, agrees: “The industry should be more willing to share knowledge and advice more freely with a focus on growing the pie, not just our piece of it. What are the ideas and innovations that make our solutions attractive? What are the problems we solve for families and businesses? How are we evolving in the face of a dynamic world? Competition will always be part of the equation, but more awareness of who we are as a whole and the impact we have as an industry will benefit all of us.” This includes players in the retirement space and the customers they serve.
Another way the industry can help is to “create a holistic and realistic plan [with consumers], addressing all key risks, including inflation, health, mortality, and longevity,” says Chris Blunt, President & CEO, Fidelity & Guaranty Life. He also thinks it is important to discuss benefits (such as guaranteed lifetime income) as opposed to product features.
“We also need to ensure that, as an industry, we don’t create unrealistic expectations for customers regarding retirement,” says Gordon Watson, Chief Executive Officer, AXA Asia & Africa. “It’s likely that many people will need to work for longer than they may have originally planned, given increasing longevity and rising care costs.” Marketing collateral focused on retirees sailing yachts, traveling abroad, and driving expensive cars is not helpful for the average consumer, who is hoping to have enough retirement income to just pay the bills.
“[We must] help clients plan ahead for what will still likely be a lengthy retirement,” says Jasmine Jirele, Chief Executive Officer, Allianz Life of North America. “The risks to retirement, such as inflation, have always been there, but they are much more significant now. It is easy to get caught up with the here and now and trying to get by financially, but it is more important than ever to develop and adapt plans for the long-term impact of the current environment. Taking a step back now to plan will mean the difference in having a successful retirement in the years ahead. Our industry needs to continue to adapt and thrive in this new environment and offer new products, services and processes that meet clients where they currently are at without losing the long-term view.”
Wade Harrison, EVP & Chief Retail Officer, Protective Life, concurs: “Insurance companies have the ability to provide protection for retirement assets — protection against rising taxes, protection of principal, protection of future income. All well-rounded financial plans should consider eliminating some element of these risks to ensure financial security in retirement.”
“People need to take advice from a professional financial planner who can assess individuals’ needs, explain scenarios to them, and provide access to suitable products,” says Watson. “Then [they need to] make sure they review plans regularly. As an industry, we must ensure these advisers are properly trained and supported in this area.”
Finally, retirement savings accumulation has been a long-term focus of the insurance and financial services industry. The focus is shifting to decumulation — that is, creating a steady and adequate income stream from those savings. This gives insurance companies the opportunity to help consumers understand income solutions such as annuities.